Audit report uncovers fraud on rice import duty by firms
The committee, uncovered massive fraud and the evasion of payment on rice import duty by firms. The report, which is said to have been forwarded to President Muhammadu Buhari, detailed how the majority of importers of rice allegedly imported in excess of the quota allocated to them in 2014 and thus ‘flooded’ the markets with polished rice that was capable of pulling down local industries.
The report entitled Report of the Ad-Hoc Committee on Rice Import Quota and Duty Payments recalled how the Federal Government originally introduced the new rice policy to encourage investments in local production by the 2016.
The House noted that under the policy, investors that had milling capacity with verified domestic rice production, plans (DRPD) enjoyed an import duty of 10% and 20% levy, while pure rice traders pay an import duty of 10% and 60%. To ensure full and proper implementation of the policy and enforce compliance, an Inter-Ministerial Committee of government issued guidelines and approved quotas for investors.
It noted that the new rice policy did not in any way encourage the importation of brown rice, because the process of getting it to the finished stage was costly, to the extent that before that stage, the importer of brown rice would have lost 10-12% and could therefore not compete with those companies importing finished products.
The report obtained by The Guardian at the weekend, stressed that contrary to the provisions of the Customs Act, imported goods left the ports without the payment of duties and levies. Ideally, no import left the ports without the payment of duties and levies.
It therefore called on the Federal Government to review the New Rice Policy, noting how the policy in its present form places emphasis on the importation of polished rice than growing rice locally.
This, the report noted, has negative effects on the local industry.
The committee directed the Nigeria Customs Service to recover outstanding monies and seal up the warehouses and other businesses of defaulting firms until the last kobo is paid to the government in line with the Customs Act. It urged the Economic and Financial Crimes Commission (EFCC) to assist in prompt recovery of all outstanding monies owed the Federal Government by these companies.
The Report signed by Chairman/Deputy House Leader, Leo Ogor and Clerk of the Committee, Mrs. Funso Babalola, called for the immediate cancellation of the entire quota allocation system and the suspension of the new 2015 quota allocation issued in the winding down days of the last administration.
It added: “The Nigeria Custom Service should henceforth implement the pure rice traders’ policy alone. Tara Agro Industries and Ebony Agro Industries are sister companies run by the same management. Their liabilities should be consolidated in line with their quota allocations.
“A lot of companies could not be investigated due to time lapse. The 8th Assembly should make further investigation on these companies with a view to recovering every kobo owed the Federal Government.
“Henceforth the Nigerian Customs Service should insist only on verifiable bank guarantees from reputable banks and stop forthwith acceptance of any corporate guarantee from companies.”
Immediate past Minister of Agriculture, Dr. Akinwumi Adesina had early this year alerted the nation that some companies given quota to import rice had exceeded their quota and owed the government money and had not paid. He had computed the amount owed the country at that time as thirty six billion Naira
Adesina clarified that the allocation was meant to protect both investors and rice paddy millers. Adesina urged Customs to enforce the tariff system, noting that companies that imported in excess of their allocation should be made to pay any excess on their allocated quota.
The report noted: “A thorough perusal of memoranda and other documents submitted to the Committee as well as presentations made at the Public Hearing on the alleged abuses, fraud and evasion of import duty by some companies and other investors reveal that the policy was not adhered to. Many rice importers took advantage of the policy and dumped so much rice in the Nigerian market. This excess has a direct effect on the local rice production.
“It has become almost impossible for the local rice millers to sell their products. There is the urgent need to review the rice quota or its outright ban due to its negative effect on local rice production, job loss, loss of foreign exchange and the abuse of the policy by unscrupulous importers due to the low levy that has been reduced from 100% to 20%.
“Qualifications for allocation were not subjected to the spot verifications of claims, particularly demonstration of verifiable production/supplies of local paddy refined.”
The committee also noted that the Inter-Ministerial Committee, the Ministry of Agriculture, Ministry of Finance, as well as the Ministry of Industry, Trade and Investment did not synergize with regard to information on the quota allocation and its implementation.
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